The City Council agreed to cap the number of medical marijuana dispensaries in Los Angeles at 70 on Monday, but dozens of others that are already operating will likely be allowed to remain open -- provided they adhere to new restrictions.

The city will let 137 dispensaries that opened legally before the moratorium on the operations was implemented two years ago to stay open.

Marijuana collectives that close or go out of business will not be replaced until the overall number is reduced to 70.

To remain open, however, the dispensaries will have to adhere to new restrictions -- including staying several hundred feet away from any school, public park, religious institution, licensed child care facility, youth center, hospital or rehab facility, and other collectives.

Hundreds of other dispensaries that opened in the city over the past two years by taking advantage of a legal loophole in Los Angeles' moratorium on the operations will be shut down. City officials estimate that between 800 and 1,000 dispensaries are operating in the city.

Under that council's action today, dispensaries would be distributed among the city's 35 planning areas, and according to population size.

Planning areas with larger populations like the Wilshire District, South Central Los Angeles, Hollywood and northeast and southeast Los Angeles would have the most dispensaries, while Bel Air and the Port of Los Angeles would have the fewest.

The council also decided to eliminate restrictions on how much medical marijuana can be stored at a dispensary. But the dispensary operators must cultivate the marijuana themselves.

To adhere to the 1996 Compassionate Use Act and 2003 Medical Marijuana Program Act, which prohibited the sale of medical marijuana, the proposed ordinance allows "cash and in-kind contributions, reimbursements and reasonable compensation provided by members towards the collective's actual expenses for the growth, cultivation and provision of medical marijuana ... in strict compliance with state law."

It defines reasonable compensation as "compensation commensurate with wages paid to employees of IRS-qualified nonprofit organizations who have similar job descriptions and duties."

To make sure collectives are not operating for profit, an independent certified public accountant would have to audit the collectives every year and submit the findings to the City Controller. Building and Safety inspectors and police officers would have to examine the location.

However, authorities could not look into patients' records without a search warrant, subpoena or court order.

The proposed ordinance requires collectives to be open between 10 a.m. and 8 p.m. and enforce stringent security measures -- including bars on their windows, closed-circuit cameras, burglar alarms, and security guards patrolling a two-block radius around the location.

As an additional precaution, collectives could not store more than $200 in cash overnight and would have to make twice daily bank drops.

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The new medical marijuana rules in Los Angeles will cap the number of pot dispensaries in the city at 70. But 137 will be allowed to do business under the LA City Council's revamped regulations for medical marijuana dispensaries.

KPCC’s Frank Stoltze followed today's med pot debate at LA City Hall - the third long session as the City Council tried to finish work on medical marijuana rules that have been in limbo for two years. Stoltze says there's a reason why the Council will let 137 pot shops stay open.

"That’s the estimated number that are still in existence that originally signed up to be medical marijuana dispensaries a couple of years ago," says Stoltze.

"And as you know there’s an estimated 900 in the city now. So many will have to shut down."

If any of the 137 dispensaries allowed to remain in business eventually close, no new dispensaries will be allowed to take their place until the total number in LA falls to 70.

Medical marijuana dispensaries already in business in Los Angeles will be subject to new city regulations. They cannot be located closer than 500 feet to a school or a park, and they have to submit to city audits. The dispensaries have to be operated by non-profit "collectives" that grow and dispense medical marijuana to members.

The City Council also wants the dispensaries to grow their marijuana on site, rather than at off-site pot farms.

The new Los Angeles regulations will allow cash to change hands at dispensaries, but only if it adheres to the guidelines set down by California's medical marijuana law. The law approved by voters in 1996 allows "cash and in-kind contributions, reimbursements and reasonable compensation provided by members towards the collective's actual expenses."

The LA City Council is not finished with the medical marijuana regulations, and it's not clear when the final vote will happen.